AYALA INVESTMENT & DEVELOPMENT
CORP. and ABELARDO MAGSAJO,
petitioners
v -
COURT OF APPEALS and SPOUSES
ALFREDO & ENCARNACION CHING,
respondents
FACTS:
- Philippine Blooming Mills (PBM)
obtained loan from petitioner Ayala
Investment and Development
Corporation (AIDC).
- Respondent Alfredo Ching of PBM,
executed security agreements on
December 1980 and March 1981
making him jointly and severally
answerable with PBM’s
indebtedness to AIDC.
- PBM failed to pay the loan hence
filing of complaint against PBM and
Ching.
- The RTC rendered judgment
ordering PBM and Ching to jointly
and severally pay AIDC the principal
amount with interest.
- Pending the appeal of the judgment,
RTC issued writ of execution.
- Thereafter, Magsajo, appointed
deputy sheriff, caused the issuance
and service upon respondent
spouses of the notice of sheriff sale
on 3 of their conjugal properties on
May 1982.
- Respondent spouses filed injunction
against petitioners on the ground
that subject loan did not redound to
the benefit of the said conjugal
partnership.
- CA issued a TRP enjoining lower
court from enforcing its order paving
way for the scheduled auction sale of
respondent spouses conjugal
properties.
A certificate of sale was issued to
AIDC, being the only bidder and was
registered on July 1982.
- The trial court, which was then
affirmed by CA, declared that the
sale on execution null and void.
- Hence, the petition.
ISSUES:
- W/N the CA erred in ruling that the
obligation incurred by Alfredo Ching
did not redound to the benefit of the
conjugal partnership of the
respondent spouses.
RULING:
- The petition lacks merit.
- The loan procured from AIDC was
for the advancement and benefit of
PBM and not for the benefit of the
conjugal partnership of Ching.
- AIDC failed to prove that Ching
contracted the debt for the benefit of
the conjugal partnership of gains.
- PBM has a personality distinct and
separate from the family of Ching
despite the fact that they happened
to be stockholders of said corporate
entity.
- Clearly, the debt was a corporate
debt and right of recourse to Ching
as surety is only to the extent of his
corporate stockholdings.
- Based from the foregoing
jurisprudential rulings of the court,
“if the money or services are given to
another person or entity, and the
husband acted only as a surety or
guarantor, that contract cannot, by
itself, alone be categorized as falling
 within the context of obligations for
the benefit of the conjugal
partnership.”
- The contract of loan or services is
clearly for the benefit of the
principal debtor and not for the
surety or his family. Ching only
signed as a surety for the loan
contracted with AIDC in behalf of
PBM.

- Hence, by Article 161, the conjugal

partnership should not be made
liable for the surety agreement
which was clearly for the benefit of
PBM.

- WHEREFORE, the petition as it is

hereby, DENIED for lack of merit.